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Report: Amazon to build Android smartphone

Amazon is going to produce a smartphone running Google's (NASDAQ:GOOG) Android platform in a bid to both challenge Apple's (NASDAQ:AAPL) iPhone and have another vehicle through which it could sell content, according to a Bloomberg report.

Amazon Kindle Fire

The report, citing unnamed sources familiar with the matter, said that Amazon is contracting with Foxconn International to build the smartphone. The report also said Amazon is acquiring wireless patents that would help it defend itself from potential lawsuits for patent infringement. Apple, in particular, has been a fierce litigant in smartphone patent cases against the likes of HTC and Samsung Electronics.

Amazon declined to comment, according to Bloomberg.

Rumors of an Amazon smartphone stretch back at least to 2010. In early April, Topeka Capital Markets analyst Brian White said an Amazon smartphone was a distinct possibility. "Our research suggests Amazon is currently working on a smartphone that we believe is planned to launch this year and could prove to be more sophisticated than many smartphones on the market," he wrote in a research note. He also suggested that Amazon will release versions of the Kindle Fire with larger screens later this year.

A potential Amazon smartphone raises several notable issues. Unlike many OEMs, Amazon could lose money (or make very little of it) on the hardware while recouping it via digital content sales. However, Amazon also would likely not have access to all of Google's Android services, since Amazon's current Android devices run a modified version of the platform.

Another major concern is what carrier or carriers Amazon would sell service through. For its Kindle ereader Amazon initially purchased wholesale network access from Sprint Nextel (NYSE:S) and later from AT&T Mobility (NYSE:T). As AllThingsD notes, Clearwire (NASDAQ:CLWR) might be a potential wholesale partner, but if Amazon wants to offer customers voice service it will likely have to partner with at least one other additional carrier for the time being.